Categories: Stories

Reserve Bank of Zimbabwe says high rate of defaults threaten micro-financiers

The Reserve Bank of Zimbabwe (RBZ) says the rising rate of defaults recorded by microfinance institutions (MFI’s) in the country poses a threat to the sector which has witnessed growth in terms of outreach and performance.

The non-performing loans in the MFIs dropped to nearly 11 percent last year, but remains above the internationally accepted benchmark of five percent.

The increase is largely attributed to aggressive growth of loan portfolios, particularly in the areas of asset and agricultural financing, as MFIs responded to the call by the central bank to provide finance small to medium enterprises (SMEs) and smallholder farmers.

“Portfolio quality remains a major challenge in the sector as measured by the Portfolio at Risk which closed the year at 10.72 percent compared to a ratio of 11.29 percent as at 31 December 2014,” said the RBZ in its latest quarterly update.

The central bank said MFIs had increased the number of active clients, number of borrowers and branch network in the quarter ended 31 December 2015 as more people leaving formal employment turned to the informal sector.

Total loans and total assets amounted to $187.16 million and $225.13 million as at 31 December 2015, up from $173.31 million and $207.74 million as at September, 30, 2015  respectively.

MFI portfolio quality has been on a downward trend since December 2012, reflecting inherent credit risk vulnerabilities in the sector in view of the current economic challenges.-The Source

(73 VIEWS)

This post was last modified on %s = human-readable time difference 7:09 am

Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

Recent Posts

ZiG loses steam, falls against US dollar for five consecutive days

The Zimbabwe Gold fell against the United States dollar for five consecutive days from Monday…

November 22, 2024

Indian think tank says Starlink is a wolf in sheep’s clothing

An Indian think tank has described Starlink, a satellite internet service provider which recently entered…

November 18, 2024

ZiG firms against US dollar for 10 days running but people still do not have confidence in the currency

Zimbabwe’s new currency, the Zimbabwe Gold (ZiG), firmed against the United States dollars for 10…

November 16, 2024

Zimbabwe among the top countries with the widest gap between the rich and poor

Zimbabwe is among the top 30 countries in the world with the widest gap between…

November 14, 2024

Can the ZiG sustain its rally against the US dollar?

Zimbabwe’s battered currency, the Zimbabwe Gold, which was under attack until the central bank devalued…

November 10, 2024

Will Mnangagwa go against the trend in the region?

Plans by the ruling Zimbabwe African National Union-Patriotic Front to push President Emmerson Mnangagwa to…

October 22, 2024